The Financials GCs are Looking For
Updated: Sep 15, 2022
The Financial Documents GCs Want to See
While it may seem that General Contractors who ask for your financial information are using a microscope to see what is going on in your business, it is much more likely they are using a different lens. And that is the lens found in a quality set of binoculars – to see how well you’ll handle what is coming down the road.
Your company’s financial statements provide information that general contractors use to evaluate your company’s past financial performance.
Just as your company’s financial statements are vital tools in your managerial toolbelt, they are also crucial to the general contractor who needs to determine if your subcontracting company will be capable of staying the course throughout the project.
Yes, they do need to know something about your past to aid in assessing your future. They need to know that you can match the speed and scale of their project. So, handing over a clean, well-kept set of financial reports is step one in establishing your capabilities.
The Big Picture
In general, the GCs who prequalify their subcontractors are looking for:
And yes, Profitability
The Financial Picture
Before discussing what financial documents general contractors want to see, I’ll mention something they don’t want to see. They don’t want the electronic equivalent of a shoebox filled with receipts and invoices.
Typically, the financial documents expected are:
Balance Sheet – Provides a snapshot of a subcontractor’s finances; what it owns and owes.
Income Statement (Profit & Loss) – Reports a construction company’s financial performance over a specific accounting period.
Cash Flow Statement – Measures how well the subcontractor generates cash to pay its debt obligations and fund its operating expenses.
Work-In-Progress (WIP) Report – This shows whether a construction company is over-or under-billing and if the cash is positive or negative.
The Final Picture
In the end, all this business with financial reports means the general contractor will know:
they’re dealing with a legitimate subcontractor
there is sufficient capital to move forward
the debt-to-equity ratio is acceptable
Winning a bid has many components (such as your company’s safety record, insurance compliance, and so on,) yet your financial records are among the most important. Be sure they’re “up to code.”
Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735